Paul Ryan's insurance reforms are a sham

As most schoolchildren know, the Golden Rule tells us, "Do unto others as you would have them do unto you." Yet, when it comes to the politics of Medicare, Republicans are having an especially hard time following it.

Earlier this year, Congressman Paul Ryan of Wisconsin, the Republican budget guru, triumphantly introduced his ambitious plan to reduce America's long-term deficits. He received respectful treatment from many mainstream media pundits who regarded him as serious and ambitious in his proposals. What especially impressed a lot of the talking heads was Ryan's "bold" approach to "entitlement reform," specifically his plan to transform Medicare. Under Ryan's plan, Medicare would no longer be a fee-for-service program in which government pays providers for most of the cost of seniors' medical expenses. Instead, the government would give seniors a voucher that would pay for a portion of a private insurance plan; they could shop for those plans on exchanges like those established in the Affordable Care Act (ACA)—aka Obamacare—that became law last year. In April, the Republican-controlled House passed the Ryan budget, including the Medicare provision, on a virtually straight party line vote.

And it's been downhill for Ryan and the GOP since.

Democratic attacks on GOP "plans to end Medicare as we know it" have gained significant traction. Polls show that a large majority of Americans oppose Ryan's vision for Medicare. In early May, Democrats brought the Ryan plan to a vote in the Senate, where it failed on a mainly party line vote, in order to force Republican senators to go on the record favoring the unpopular budget (all but five GOP senators voted for it).

In addition, Democrats just won a special election for a congressional seat near Buffalo in a district that has been GOP-controlled since 1970. A key issue in that campaign was the Republican candidate's support for Medicare overhaul. As a result, Republicans in general and Ryan in particular have become increasingly defensive and angry, complaining loudly that the Democrats are engaging in "Mediscare," what they call an irresponsible and demagogic attempt to transform a serious national problem into an opportunity for crass partisan advantage. The GOP has become desperate enough, in fact, to have recently insisted that neither side should run campaign attack ads in 2012 about Medicare.

Medicare faces a long-term funding shortfall. The Medicare trustees say the program's trust fund will run out in 2024. This doesn't mean that Medicare will cease to exist in 2024. But with medical costs continually rising and the population aging, the program's financial strains will only grow. Ryan argues that market forces will fix this problem, by "empowering" seniors to make their own choices about what insurance to buy and "punishing" insurers that charge too much or provide inadequate coverage.

The Ryan plan would bar insurers from denying coverage to seniors based on pre-existing conditions and would give less well-off seniors higher-value vouchers than more affluent seniors. In fact, Ryan and the Republicans have touted the plan by repeatedly—and I do mean repeatedly—asserting that it is "just like" the one that members of Congress receive. Ryan has also repeatedly pointed out that people 55 and older will be unaffected, since they will remain eligible for the traditional fee-for-service-based program.

But Ryan's claims are riddled with distortions. His voucher plan would not give seniors coverage just like that of Congress. Members of Congress and other federal employees do choose from an array of preselected plans, just as ordinary Americans would in the exchanges. But the "premium support"—the Republicans' new focus group-tested term for "vouchers"—that members of Congress receive covers the equivalent of, on average, about 70 percent of their total costs. By contrast, according to the Congressional Budget Office, Ryan's vouchers will cover less than half of the cost of insurance in 2022 and, due to health insurance inflation, a little less than one-third of the total cost by 2030. Additionally, because private insurance has much higher administrative costs than does Medicare, CBO estimates that the Ryan plan would add more than $30 trillion to total health insurance costs over the next 75 years, roughly five times the entire projected Social Security shortfall for that time period.

Most important, though the Ryan plan bars insurers from denying coverage based on pre-existing conditions, it does not guarantee coverage for seniors who cannot afford to buy a policy.

In sum, Ryan's plan isn't saving money by restraining medical costs, by far the biggest contributor to our projected long-term deficits. Instead, he's just massively shifting the burden of ever-rising costs from the government onto seniors' backs. And he's doing it to fund new tax cuts for the wealthy. Ryan and his supporters insist that the CBO estimates are wrong because market discipline will drive down the cost of insurance. Even if that were true—and the premise that health care markets work like other markets is highly dubious—there's no plausible set of assumptions that gets the Ryan voucher plan close to what Congress and federal employees currently receive.

As Jonathan Chait, a critic of the Ryan plan, has argued, you can call two cars similar because they each have a CD player and two-wheel drive. But that's not what most people have in mind when they compare two cars. Ryan can say his plan for seniors is "just like" the plan that his colleagues receive, but that doesn't make it so.

So Ryan's key claims don't stand up to scrutiny. What else is new? But how, even by their standards, are Republicans so egregiously violating the Golden Rule?

In 2010, Republicans ran repeated attack ads against Democrats who voted for the Affordable Care Act, on the grounds that ACA cut Medicare by half a trillion dollars. The ads were, in all likelihood, one key to their enormous victories in the mid-term elections, as older Americans swung heavily to Republicans in 2010 after having split their vote evenly between McCain and Obama in 2008.

And those ads were, in fact, dishonest. They implied that the provisions in the ACA to restrain the cost of Medicare over time would adversely affect seniors. This is untrue. For example, one key provision in the ACA would stop overpayments to Medicare Advantage plans, privately administered versions of Medicare that were created as Medicare Choice in 1997 and have proven far more administratively expensive than the traditional plan. Ending these overpayments will save roughly $130 billion over the next decade but will not affect seniors' care under Medicare.

In fact, the Ryan plan retains virtually all of the Medicare cost-saving measures in the ACA that Republicans attacked so vehemently in 2010 and continue to attack. Let me repeat that so there is no misunderstanding: Essentially all of the Medicare cost-saving provisions in the ACA that the GOP relentlessly bashed in 2010 and continues to criticize are in the Ryan plan that almost every Republican member of Congress just voted for. And it eliminates parts of the ACA that would directly and materially help seniors on Medicare, like the provision that would close the notorious "donut hole" in Medicare's prescription drug coverage.

The demagoguery charge is absurd for other reasons. Remember the repeated GOP cry of "death panels!," whereby "Obamacare" would allow bureaucrats to decide when to "pull the plug on Grandma"? The basis for that charge was a provision in the ACA that would give doctors incentives to have a conversation, yes, a conversation, with patients about end-of-life directives.

The GOP knows that the Ryan budget could be an albatross next year. So they're insisting that Democrats do that which the GOP would never, ever do: refrain from running attack ads on an issue about which they have a huge advantage.

And, unlike the Republicans' Medicare ads in 2010, the Democrats' attacks on the GOP Medicare position will have the virtue of being a reasonable characterization of what the Republican plan actually proposes: to transform Medicare from a program that largely guarantees that seniors will be able to afford decent health coverage to one in which no such guarantee exists.